Paper Number

1273

Paper Type

Completed

Description

In the aftermath of natural disasters, borrowers seeking credit from traditional sources, such as banks, may encounter higher interest rates than in pre-disaster periods. We examine the lending behavior of peer-to-peer (P2P) platforms in the wake of disasters. Since P2P platforms involve individual investors in making lending decisions, they accommodate both profit motives and empathetic responses. Empirical evidence from psychology suggests that empathy can lead to prosocial behavior. Consistent with this assertion, we find that loans affected by natural disasters have lower interest rates than comparable loans not issued in the wake of disasters. Our study finds that lenders are involved in a prosocial behavior and are ready to give away some part of their interest income to help the communities in need.

Comments

05-SocImpact

Download

Share

COinS
 
Dec 11th, 12:00 AM

P2P lending and Natural Disasters: Is Altruistic Behavior conditional?

In the aftermath of natural disasters, borrowers seeking credit from traditional sources, such as banks, may encounter higher interest rates than in pre-disaster periods. We examine the lending behavior of peer-to-peer (P2P) platforms in the wake of disasters. Since P2P platforms involve individual investors in making lending decisions, they accommodate both profit motives and empathetic responses. Empirical evidence from psychology suggests that empathy can lead to prosocial behavior. Consistent with this assertion, we find that loans affected by natural disasters have lower interest rates than comparable loans not issued in the wake of disasters. Our study finds that lenders are involved in a prosocial behavior and are ready to give away some part of their interest income to help the communities in need.

When commenting on articles, please be friendly, welcoming, respectful and abide by the AIS eLibrary Discussion Thread Code of Conduct posted here.